Question

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share. If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell?a. $104.27b. $106.95c. $109.69d. $112.50e. $115.38

Answer 1

Answer:

$115.38  

Explanation:

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Please find below the answer  

Statement Showing Computations  

Particulars                mount

Annual dividend on preferred stock                            7.50

Required return on preferred stock                            6.50%

Price of preferred stock =    7.50/6.50%                      115.38

Therefore for the answer is  $115.38